Further transition from a local, industrial economy to a global, digital economy

Article

Further transition from a local, industrial economy to a global, digital economy

How to adapt your organisation and finance to capitalise on today’s opportunities and challenges in the public sector 

Enormous amounts of data are generated in our digital society, as ICT and social media platforms enable people all over the world to collect and share information. The government also contributes to this and saves incredible amounts of data. But what do we do with all this Information about things, groups of people, buildings, roads, individuals, their behaviours and interactions? How can the public sector more effectively use the available data to enhance policy implementation and/or achieve the realisation of their goals?

Nederlandse Versie


Although the public and private sector differ in many ways, they share some similar challenges. They both need to stay relevant in a changing world, with increased digitalisation and continuously changing (consumer) demands.

In a series of articles, Deloitte investigates the trends, innovations, opportunities and challenges for the public sector in dealing with the new reality. In which the focus is on the way in which public organisations can effectively organise themselves (differently) and the possible means of financing public goods and services. We believe that boardmembers, directors, civil servants, and (other) employees of public bodies can benefit from a thorough investigation into the developments taking place in the corporate world. These insights can be translated into concrete solutions that will create social value.

The digital transition

We are at a pivotal point in history, with technology developing at a speed never seen before. The era of the local and industrial economy is over and we’ve welcomed a global and digital economy in its place. Who would have thought twenty years ago, that you would be able to access information about people you’d never met before? Or that, with the touch of a button, or better still, the swipe on a screen, you could compare prices of a product across a multitude of shops? Not only locally, but globally!

In the corporate world, this disruption is providing big business for many companies. Companies such as Alphabet, Google’s holding company, have created an incredibly smart search algorithm, but their mission—which they are still developing and in the process of accomplishing— is to make all the information in the world available to all of the people in the world. Airbnb is another example of disruptive development. Airbnb has more rooms for rent than any hotel in the world, yet they don’t own a single brick of real estate.

Does disruption work in government services?

These developments yield enormous amounts of data and information. To what extent can governments use this data in their interaction with citizens?

Using data analytics it is possible to measure all sorts of things, even sentiments in society, almost instantly. For example to measure the effectiveness of a certain policy. The same platforms and connections you used to use to gather your feedback now have algorithms that enable the filtering of information. This filtering mechanism can be used to influence people’s behaviour—so-called ‘nudging’.

An example of this is the rumour that during this year’s US presidential campaigns, negative news about Hilary Clinton was harder to find than positive news about her. Data can also be used in a more predictive way to help realise policy goals, such as reducing crime or fraud, for example. Predictive statistics are already in use to forecast the likelihood of burglary in a predefined geographical area and time zone. This makes the data and feedback both interesting and useful.

Are citizens ready for digital?

Governmental institutions are increasingly offering their services digitally (think of the tax authorities, for example). It is important to offer all citizens equal access to these governmental goods and services, yet in the digital world not everyone is equal. Socio-economic or demographic differences mean that some have more access to digital sources than others. It is difficult for governmental institutions to facilitate all groups of users and to offer interfaces in line with the specific needs of the user. All things considered, there’s a clear distinction between citizens who have no difficulties being part of a digital society (the so-called ‘haves’) and citizens who experience great difficulties in this regard (the so-called ‘have-nots’).

Then there’s also the issue of citizens’ expectations based on their experiences as ‘customers’. They are used to a certain level of service. If they order something on bol.com, they can rely on a 24-hour delivery service. Bol.com also keeps track of previous orders, so they know a customer’s preferences and can compare those with others who bought the same product. Such customer profiling enables bol.com to influence its customers. The same principle applies to Facebook, Google, Bing, and many, many more.

So what can the public sector do in order to provide access to the digital society for both the ‘haves’ and the ‘have-nots’ alike? And how can they live up to the expectations citizens have regarding service levels? We think the key is getting hold of the right information.

Show me the data

Governmental institutions want data—for policy feedback, support and predictive analysis. Apple, Facebook, Google, bol.com and the likes already have this data. This opens up opportunities for the public sector to collaborate with these big corporates? A public-private alliance can have all kinds of advantages: solutions can be designed to solve the inequality of information between the ‘haves’ and ‘have-nots’ and information can be broadcasted (and even narrow-casted for that matter) in such a way that civilians are nudged to comply with policy.

A symbiosis can be built, in which the internet as a platform allows providers to achieve their commercial goals and in which governments are better supported in achieving their policy goals. That sounds like a win-win situation wouldn’t you say?

More in this series

This is the first article in a series about the importance for the public sector to adapt. Both in terms of organisation and in terms of financing, in order to effectively capitalise on today’s opportunities and challenges.

The next article will explore what the shift to digital means in terms of the interaction between government, citizens and other stakeholders.

 

Authors: Marjolijn Eijsink (Risk Advisory), Daniel Charite (Innovation Public Sector, GovLab), Annemieke Huibrechtse-Truijens (Risk Advisory), Maurice Knecht (Risk Advisory, Health Care), Louise van Loon (Strategy), Jacco Maan (Governance & Finance Strategy), Hans Teuben (Public Sector Strategy & Innovation).

More information?

Do you want to know more on Further transition from a local, industrial economy to a global, digital economy? Please contact Jacco Maan at +31 (0) 88 288 70 36 or Hans Teuben at +31 (0)88 288 20 06.

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